Fintech 6 December 22

Reinventing Wealth Management

Currencycloud and Pearler
By: Currencycloud and Pearler
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In the run up to 2022’s Intersekt conference, Anthony Man, VP of Sales, Currencycloud, APAC talked with Nick Nicolaides, co-founder and CEO of investment platform Pearler about the evolving sector of wealth management in Asia-Pacific with a focus on Australia. They explored how innovations in technology are key drivers in its adoption by a whole new generation of young investors who are set to reshape the future of digital financial services. Here are the main takeaways from the webinar. 

A younger generation is reinventing wealth management

Tech-savvy young people are a huge part of driving change in wealth management. Their reasons for investing are centred around making a better life for themselves and achieving financial freedom are different from those that motivate most traditional, older investors. This shift in purpose has caused the way people talk about wealth and share information to change too. Having easy access to financial education through Finfluencers (financial influencers) on social media and TikTok, is at the forefront of the Millennial and Generation Z conversation.

Many Millennials and Generation Z are starting their investment journey early, which allows them to take a longer term perspective to generating wealth. As a consequence, we can expect to see more sensible, long term investment strategies being encouraged and adopted. However, the cryptocurrency space has revealed that there are still a lot of ‘get-rich-quick’ thinkers out there.

This younger cohort are also interested in investing with impact and are more engaged in where their money goes and what it is used for than their Generation X predecessors. It’s not just about returns anymore. We’re seeing this attitude drive change across the whole Wealthtech industry. It’s why environmental, social and governance (ESG) is a standard part of funds management, and every manager should have a policy in place to offer ethical investment funds.  

Technology, the driver of change for Fintechs 

Thanks to APIs, fund managers are using technology to do far more rapid trading, with the result that money is moving more quickly around the world. Different financial products like exchange traded funds (ETFs) or exchanges like Pearler using APIs are opening the door for people who’ve not considered investing before to help them start investing and develop better investment strategies early in their investment journey. It’s an exciting time to be in Wealthtech, but it comes with new challenges.

One thing APIs deliver is the ability to enter other markets quickly. But before a Fintech does this, it needs to know about the culture in another market, and know about how the banking system works. For startups, it makes sense to focus on changes and opportunities that are happening on the home turf and speed up innovation on the domestic front first. 

There’s a lot of innovation happening in Australia’s Wealthtechs. With open banking, and open superannuation, there is a real opportunity that a startup can be on a level playing field with incumbents because technology is driving a lot of the change, and this is where most Wealthtech startups feel at home. 

Nick Nicolaides on Pearler:

“People are trying to build wealth for their future. As a platform, Pearler focuses on building best behavior for building wealth. It is a share trading platform that is driven by education and helping a particular community. It is a conversational ecosystem. We exist to offer wise, considered advice to help people get rich slowly, not quickly.”

Tech should take a customer-first approach

It’s no longer enough to have a Fintech product that is delivered on speed or low cost. Innovations must come with the focus of improving the outcome for the customer. The next frontier is advice. Young people are demanding advice so much that they are going to social media and TikTok for education. Wealthtechs like Pearler are actively positioning themselves to be a space that gives community-led information, and professional guidance. 

Technology takes care of the transactional aspect really well. What’s left to focus on is how to use technology to retain customers, improve the customer experience and give a better outcome for customers. This exciting territory is one that drives a Wealthtech like Pearler. 

“Pearler set out to build a product that is simple, easy to use and rewards patience. We give them automation tools to make it easy for them to do the sensible thing and embark on a long term investment journey.” Nick Nicolaides, Co-founder and CEO of Pearler commented. 

“A big part of Currencycloud’s business is focused on Australia, where we see a lot of innovation. From a Fintech perspective it has the benefits of being a relatively large, relatively sophisticated and relatively homogenous market in terms of laws and regulations. Australia’s financial services are well developed, and have been great in terms of building wealth. As tech evolves and demographics change, and user requirements change, maybe there needs to be more innovation to serve new customers’ needs.” Anthony Man, VP of Sales, Currencycloud.

APIs are hastening change

Companies who get very good at integrating via APIs and being quick, and leveraging that, should continue to get ahead. The key is to have the customer. This is where incumbents have a great opportunity.

Thanks to APIs, the wealth industry might split into separate parts even further. This has been a trend over the past ten years: taking a singular approach and stripping back from banks’ broad monopoly over various products.  However, super apps are the reverse of this trend as discussed later.

AI embedded in Wealthtech

Artificial Intelligence (AI) is taking on a more significant role in wealth management and wealth generation, particularly for traders. The Wealthtech platforms that can quickly aggregate and share information in a consumable way will do well. The area of AI that has grown in prominence is that of robo advisors which are expected to be in platforms more frequently, determining the optimum investment portfolios for investors through algorithms.

Open banking, removing friction

“If you take China and India out of the equation, APAC is a huge but fragmented market. Unlike the US which had open banking adopted almost organically, and the UK and Europe which passed specific legislation to get open banking passed to accelerate innovation, there is no single regulator in APAC that can push a blanket transition to open banking through.” Anthony Man, VP Sales at Currencycloud  

Australia benefits from an established open banking system, with the Government passing open banking legislation in 2019. This has benefitted Fintechs and Wealthtechs who can, with their customers’ consent, share data through APIs allowing wealth managers to make personalized investment advice, and removing friction from the process. 

Getting access to transaction-level data and synthesizing that information would be hugely beneficial to a Wealthtech whose customer who, say, wanted to automate their investing while also wanting to streamline that alongside their spending.  

Advances in open banking and advances in brokerage APIs have made it much easier to move money overseas.

Using past successes to drive innovation

Pearler’s Nicolaides noted that when they created the Pearler app, they looked closely at the financial literature that had worked so well in the past to guide them and act as a framework. The likes of Morgan Housel and Warren Buffet had sensible advice that is worth heeding just as much as investing in technology. The sage advice was to make diversification a key element of investing, and to make investment habitual. To that end, Pearler created a simple app that includes AutoInvest, which gives investors the opportunity to choose the amount, frequency, and shares they want to invest in, and set an Autoinvest strategy that suits them.

Currencycloud is an API-driven company. It is part of the API economy making it easier and faster for people to transfer money, using virtual accounts and other services. Harnessing APIs, Pearler is committed to helping investors get the insight and knowledge they need to make long term investments for their futures. 

Get in touch with a Currencycloud expert to find out how we can help you be the next financial super app or digital payment powerhouse.

   Currencycloud x Pearler


Currencycloud and Pearler
By: Currencycloud and Pearler

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